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You are here:Home>>Strategic Research & Analysis>>Nigeria and Recession – Why & When
Saturday, 17 September 2016 22:23

Nigeria and Recession – Why & When

Written by Micheal A Adeniyi
Minister of Finance, Kemi Adeosun Minister of Finance, Kemi Adeosun


It is more than 2years that we know recession is coming but its just a month that we have heard entered and read about recession , slowing economy, reduction in industrial output , high inflation , negative agricultural growth , voluntary cut in production , lay-offs , reduction in wages , shutting down of companies etc . President Buhari and other ministers kept assuring that we are a decoupled economy with very ‘strong fundamentals’, and that Nigeria will not be affected so much, Just a couple of months, bear with us was the anthem. Personally, I am compelled to be optimistic, as I can’t afford to see my colleagues losing jobs, factories shutting down, people dying of hunger. Alas its just funny that a country with millions of citizen is fighting a blame game at this time. Government will finally put it on global crises. But Nigeria was supposed to be a self reliant economy? Right? So are we saying we are beggars to the world and when the world goes belly up we will be reduced to what we are?


Shame on the politicians who are liars of the highest order and distorting facts
There are five big questions that need answers from all of us and not just the government whom we have voted to power. These questions are related to the so called recession
1. Why it happened
2. Who failed us or who let us down
3. Where are we today
4. What is the solution
5. What we can do to prevent the same


Why it happened?
Looters ruled Nigeria for years politicians became rich , corporate houses became richer and the masses in Nigeria remained poor. When it came to voting, it was easy to ‘Influence’ and ‘Buy’ votes by offering ‘cash’ and ‘food and clothings’. Many falls for this and they are the people who count when it comes to voting, and not people like you and me who read and debate extensively on promises made. In Nigeria we measure our economic strength in the foreign exchange reserves. These foreign investors also got into the stock market. Over the years, we got a very high. WOW!


At this point, Dangote became the richest man in the Africa, Many Millionaire were Made in Nigeria (just for a few Months!!). Just a few Nigerians who left the Nigerian shores for abroad and made it big or maybe some of this looting politicians. The type of politicians ‘who promises to protect rich from the poor and poor from the rich on the pretext of extracting money from the rich and votes from both’ as I fondly call them.


Who failed us?
Government did not fail alone. Media, in my belief, which is the teacher of modern society failed by selling its ethics and focusing on yellow journalism. Most of the top journalists are known to enjoy privileges and selling their conscience to others and write what their ‘Actual employers’ pay. Judiciary: I read a judge having said that, they should not equate to politicians & judges should not be asked to disclose their assets. SHAME ON YOU MR. Judge. Hopeless is a charitable word to describe judiciary in Nigeria .


All the pillars of democracy have failed as judiciary is corrupt to an extent of over 90 %. Can you imagine the rot when a president claims the Judiciary is corrupt? What worse can you imagine? If the president can be a victim of this inefficient judiciary what can a common man expect? If the judges have any shame they must quit en masse! You are a bunch of corrupt and inefficient people on the tax payer’s money and you don’t want to disclose your assets? Why the hell you want to keep them secret? Tell me a reasonable cause.
Could you not try cases related to political corruption on priority things would have been different. But these greedy judges are not worth trusting for any worthwhile things. They just keep passing judgments that gives them publicity.


No one trusts the government; everyone fears the judiciary and Law enforcement agencies. In all, the system has failed to deliver. I am not commenting the education and healthcare system as they don’t exists in the country. In all, I believe that our education system & more importantly teachers, media and judiciary have failed and delivered a fatal blow to our democracy Teachers should be blamed for not being able to inculcate values amongst the students.



Where are we?
A country is as strong as its citizens. When more than 80 % of the people are struggling to earn a two meals a day even after 56 years of Independence, have we gone the right way? We are today in midst of two serious crises. One is the economic crises and the other is political crises. Successive Nigerian government did not focus on developing the agriculture, infrastructure, SME, Retail & research based education. This had created a ‘Big economic divide’. Our politicians did not realise that the capacity building that could have resulted on building these sectors could have catapulted Nigeria into a different growth trajectory in the last two decades.



Most important : Every one , right from the finance minister says that the worst is yet to come but they don’t tell what is the worst and when it will come and what is the solution ? It is like an astrologer telling you that you will die. Everyone dies one day , so what big a deal to tell that ? One should be able to tell when and how will you die .I believe that , We are actually nearing the mid of recession cycle, and we will come of it in another year and a half. Political crises: Integrity must flow in politics. Also, every Nigerian citizen has failed by not being active in politics and just making politics a tea table and road side discussion item. It is such a serious issue and has been treated casually by the Nigerian populace.



What is the solution?
Complex problems have simple solutions and political crises have an economic solution. First thing that needs to be done is to cut interest and lending rates in one shot and not in installments. I have been telling our President since last year in my aricles that we don’t need ‘Baby steps’ economic committee, we need firm and drastic measures Secondly, we must announce massive investments in infrastructure, Education & Research and IT.
Agriculture should be given a big push with incentives for organic farming & cash crops. even if one works for a day in a field, he is a farmer!! Which inflates the number of farmers in the country?


Five sectors can relieve Nigeria of its miseries; Infrastructure, Agriculture, Education, Retail & IT. Fortunately, we are at a nascent stage in every major sector . Be it agriculture , SME, Retail , IT , Automobiles, industrial growth , urbanization etc . In the US , the problems are of plenty , saturation & wastage . We are just at the reverse . Whilst US might find it difficult to protect and grow , we can log on to a massive growth with the right initiatives . Infact, Nigeria and US are at the two extreme ends of the growth cycle. All sectors in Nigeria have a potential for phenomenal growth.


Where will money come from?
What do you do when your family gets into financial problems? You sell a part of your assets for temporary relief and buy them back or buy better things in the good times or when the financial condition improves and when government dilute the equity and follow a moderate privatization drive to raise money to invest in the five sectors mentioned above. This is the way Nigeria can come out of the recession faster and build an economy with 10-15 % GDP growth every year or more.

 

Nigeria’s parallel economy is much bigger than the economy of taxes . This money needs to be brought back and invested . I am not at all mentioning the money hoarded in Swiss banks and other havens. All this can solve Nigeria’s problems today evening. This is a must , if we want to build an economy based on solid Economic and social foundation. Lay-offs are one part of the problem what about the fresher’s who are struggling for jobs. We need to create more job opportunities. Defence spending should be cut and the same be invested in infrastructure. The defense strategy should be re-looked and reworked.


All tenders for house-keeping, parking stands, vendors in public places and railways etc should be reserved for both educated and uneducated youth but on financial background.
We must have guidelines where we build economy on 50 % services, 60 % manufacturing and 10 % on global trade. We must never exceed exports more than 15% of our GDP.
Need driven services never go slow or out of business? Nigerian economy must be ‘inward looking’ and should be build on essential services and these should not be imported. All the national demand should be met by domestic producers. Need driven sectors like agriculture, Healthcare ,textiles , processed food , Education , Oil and natural gas should be country centric and needs more thrust for explosive growth.


Finally, every Nigerian needs to spend 10 minutes a day for politics and community work, An hour a week. Go start a neighborhood-nation building programme to ensure good governance.


There are three sources of growth for an economy, increase in capital, and increase in labour force, and improvement in productivity. We will have to address all three.
There is a difference in Economic growth and economic development. Economic growth is purely GDP but economic development is a broader concept that includes not just GDP but also indicators like social justice , income distribution, political freedom, pollution , Equality of income. GDP captures average national income , but do not reflect how that income is spent.. Even increase in aids and cancer incidences in the country will add to the GDP expenditure on health services , Also, calamity will lead to the increase in GDP due to increase in reconstruction activities.


Moreover, GDP growth rate is inadequate measure of growth as it is calculated largely on the basis of rate of growth of income of the upper 30-40 % of the population who receive disproportionately large share of income. It calculates only money transactions and leaves many important activities and social measures and conditions like adult literacy rate, life expectancy. We must change our economic measurement methods from economic growth to economic development. Nigeria needs to re-look into the growth measurement model. We have a solution for economic crises. We need to act fast and grow faster.


Micheal A Adeniyi is an analyst writing from Lagos, Nigeria.

Last modified on Saturday, 17 September 2016 22:40

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